Credit derivatives volumes continue to explode but dealers have convinced regulators that the market is no longer a ticking time-bomb in terms of processing problems. The effectively default-free backdrop to credit trading in 2006 has brought its own problems, however. Industry representatives at the recent IFR credit derivatives roundtable pinned their hopes for a significant broadening in the market on the development of a liquid loan-based credit default swap market. This market has suffered

Doug Warren - Barclays Capital Doug Warren is a managing director and head of North American credit derivatives at Barclays Capital. Nik Khakee - Standard and Poor’s Nik Khakee is a director at Standard & Poor’s responsible for analysis of credit derivative product companies. Derek Smith - Deutsche Bank Derek Smith is a managing director and head of North American credit derivatives trading at Deutsche Bank. Amit Agrawal - AIG Amit Agrawal is a senior portfolio manager responsible for credit

IFR: How has the nascent market for loan-based credit derivatives developed and what does the sector need to become liquid? Doug Warren (Barclays Capital): I think what the market needs to become liquid is probably a sell-off from the credit markets. At this point, I think most of the involvement has been between loan asset managers, hedge funds and dealers. It is not entirely clear where the natural short is in the market. I think there is clearly a desire to get long through the market. For th